Blume Ventures to claim portfolio firms hold Indian accounts, minimise exposure to foreign markets after SVB collapse
By siliconindia | Monday, 20 March 2023, 15:35 IST
Blume Ventures an Indian early phase startup backer, will demand portfolio companies headquartered abroad hold well capitalised bank accounts in India after the collapse of Silicon Valley Bank. The collapse of the US lender left the firm, which says it handles about $600 million, scrambling to shore up capital for its firms whose funds got stuck, according to partner Ashish Fafadia.
To further diversify banking risk, Blume’s portfolio companies will now be asked to maintain multiple accounts to park funds, and invest money in term deposits to the extent there is insurance cover. “I am ready to implement all things rigorously which otherwise used to be requests or guidance,” Fafadia said.
Fafadia joins executives at companies ranging from startups to publicly traded entities saying they are evaluating their cash and financing strategies and looking to reduce potential risks.
The world’s second most populous nation has a sturdy startup ecosystem and many fledging firms set up offices in the US to be closer to investors, while still continuing to use India as a base for functions such as operations, research and data crunching.
The venture capital firm will strongly discourage startups from investing in any money market instruments with durations longer than three to six months, said Fafadia. Who spent hundreds of hours trying to help portfolio companies with exposure to Silicon Valley Bank when it started to unravel last week. He declined to specify which firms had accounts with the bank. “Keeping money in long term bonds is always something I have been against, but somehow chief financial officers and founders of startups look at that bit as extra income,” he said.
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